Who has had the biggest influence on your career?
My friend Paul Tudor Jones. We were both Southerners in the big city of New York. Paul got me my first job, with E.F. Hutton as a runner on the floor of the cotton exchange. That was many moons ago, but I would say that his real mentorship came when I started trading commodities and launched a CTA fund. I didn’t know that it would turn into a hedge fund, but when I started to raise money for a hedge fund, he was a big supporter with his investors.
His approach to research and trading had a real impact too. He wasn’t worried about small stuff. He taught me to think in points, not dollars, and he always used to say, “It’s just points, it is not money.” He gave me an ongoing tutorial in disassociating oneself from the result of the trade, yet still having passion about it.
Why do you live in London?
Living here gives me broader perspective on a number of different countries. I find it ideal to be based in this time zone, and I use the time advantage to set up early for the U.S. markets.
How do you decide where to invest?
We tend to make top-down, interest-rate-driven investments. We’ve been pretty U.S.- and European-centric throughout most of Moore’s history, and we have been pretty closely focused on what happens with the interest rate cycle and the reactions that it drives around the world. But our focus is shifting now because micromarkets — and those can be anything from individual equities to commodities and emerging markets — are becoming more and more dominant.
What accounts for Moore’s success?
Hard work, patience, knowing when to hold ’em, fold ’em or go all in. We have a rigorous risk framework, and although I do not micromanage every position, my portfolio managers understand the risk format prior to joining the firm.
Does the label “global macro” reflect your style?
We kind of had the moniker “global macro” thrust upon us. We didn’t sign up for it. But I look at it as kind of the 007 license to do whatever we want, and we’re in a period now where globally there is no lack of opportunity: in fixed income and currencies and the distressed and credit markets. We don’t have to try and decide to make our money in any one instrument or strategy — we can invest in private equity, individual equities or arbitrage. We feel that we are versatile enough that we can move into a number of different strategies, and if doing that means that we’re global macro, then we’re not going to argue with the label.
Are there historical precedents to the current turbulence?
You can find similarities, but this situation is shaping up to be a long-term bear market — and it is corresponding with a secular decline in American financial power. You have to hark back to the ’70s to get an equivalent sense of loss of U.S. control. At that point in time, though, the U.S. had no natural economic rivals. Now there are a number of emerging markets, like the BRICs — Brazil, Russia, India and China — that are vying for power and showing economic leadership. They may, in time, rival U.S. global dominance.
How worried are you? Especially about inflation.
The U.S. has gotten out of a number of really difficult economic situations where inflation was a pressing issue, so there is an expectation that we’re going to get out of this crisis, too. But I’m very concerned, given the negative savings dynamic in the U.S. and the inability of our politicians and people to acknowledge that we have the financial structure of a third-world economy dependent on leverage and dissaving, coupled with an addiction to foreign goods and oil. Other competing economies are much more disciplined.
What was your best trade?
I’m lucky enough to have more than one. The first was a complete market malfunction. In the crash of ’87, I happened to be short Nikkei contracts, and as we were finishing up and closing the books late on that Monday night, the Nikkei futures opened at 4,000 — it had closed the night before at 28,000! I bought shares to close the short position between 8,000 and 18,000. It was incredible buying the second-largest stock market down by almost two thirds.
Had I not been in the office during those 15 minutes after the market opened, I would have missed it. The lesson was that a good part of success is predicated on showing up and putting in time.
The second great trade, or a great exit, was in the last week of the Nasdaq rally in March 2000. We were really worried about what the Fed was going to say, so we sold close to $2 billion of Nasdaq futures just before the bottom fell out. Now that sounds great, but I had told my head trader earlier in the week to get rid of all of our technology longs we had been riding for months. But he didn’t sell anything that week, so we ended up with a lot of dot-com equity on our balance sheet. Not executing the entire trade cost us dearly, however beneficial selling at the peak of the market. The lesson was, Don’t rely on others when you are really sure.
The last one, last year, was probably where we made the most absolute money, and that was in subprime. We traded around the position very poorly and yet made a ton of money. The lesson was that picking the right investment will trump any lousy trading around it.
Worst trade?
I have probably blanked them out of my mind — not enough memory for them.
What’s it like to work for you?
We run a laissez-faire, entrepreneurial shop. I started my career in futures, and the rallying cry was always free markets for free men, so I’ve tried to create an open architecture here for traders to test their ideas and thrive. I think that we have a good understanding of risk, but we take a different approach to it. We prefer to see what our traders want to have as their individual risk profiles, and then we fit our assets around those to modify our net exposure.
Should hedge fund managers give back?
They should, and they do, probably more so than other pockets of wealth, perhaps because after mastering the markets on their wits, they believe their wealth is replicable. In 1992 we founded the Moore Charitable Foundation, which aims to conserve and protect our natural resources. Conservation remains underfunded relative to other charitable causes, and the organizations we support are working to slow the loss of Earth’s resources.
What’s the most pressing issue facing the world?
A Malthusian population explosion intersecting with globalization. We have encouraged all 7 billion of the world’s inhabitants to live like Westerners, and now that they have taken the bait, we are realizing it is impossible on this small Earth. The first big hit has been to the environment; the next, which we are witnessing, is to energy prices, and it is leading to food shortages and eventually more famines.
Governments are only starting to address the problem, and the planet’s most inventive and powerful economy, America’s, is leading only from the rear, if at all, given our present administration.
— Interview by Loch Adamson